Naira gains as CBN removes FX, securities restrictions on discount window

The naira appreciated against the dollar on Thursday after the Central Bank of Nigeria (CBN) eased restrictions on foreign exchange and government securities transactions by banks and opened access to its discount window. The dollar was quoted at N1,357.65 at the Nigerian Foreign Exchange Market (NFEM), compared with N1,360.58 on Wednesday.

CBN data showed the naira gained N2.93 in the official market. In the parallel market, the currency held steady at N1,424 per dollar. The gap between the official and parallel rates widened to 4.94 percent from 4.71 percent the previous day.

Market activity and turnover

The number of deals at the interbank segment of the FX market dropped by 48.42 percent, from 190 on Wednesday to 98 on Thursday. Total turnover also declined by 53.13 percent, to $79.09 million from $168.76 million.

NFEM figures for Thursday were not available at the time of reporting. However, activity increased the previous day. Total turnover at the NFEM rose to $607.47 million on Wednesday, a 228.38 percent increase from $184.99 million on Tuesday. The number of deals at the NFEM also rose by 119.89 percent, from 186 to 409.

Reserves at 17-year high

Nigeria's external reserves, which give the CBN firepower to defend the naira, have continued to grow. They stood at $52.19 billion as of August 12, 2026, a 17-year high. This represents a 28.39 percent increase compared with $40.65 billion recorded in the corresponding period of 2025, according to CBN website data.

CBN removes restrictions

The CBN has removed restrictions that previously prevented banks from accessing its Standing Lending Facility (SLF), also known as the Discount Window, after participating in foreign exchange transactions and primary auctions of government securities. The move is part of a review of the framework governing access to the Discount Window, Tenored Repo Operations and participation in Open Market Operations (OMO).

In a circular signed by Okey Umeano, acting director of the Financial Markets Department, the CBN said restrictions on access to the Discount Window arising from participation in the NFEM had been removed. The bank also removed restrictions arising from participation in primary auctions of government securities. Banks can now participate in the FX market and buy government securities at primary auctions without losing access to the CBN's Standing Lending Facility.

Analysts at Quest Merchant Bank Limited said the reforms should improve market liquidity, strengthen monetary policy transmission and deepen participation in the fixed-income market. "The measures are likely to deepen activity across the money market and fixed-income markets while signalling growing confidence in FX market stability, reserve adequacy and overall market conditions," the analysts said.

For Nigerian businesses, the policy opens up more room for banks to trade in government securities and FX without losing access to CBN liquidity support. That could improve market liquidity and support naira stability, though the widening parallel market gap shows demand for dollars remains strong.